A stark warning from Marc Zeller, founder of the Aave-Chan Initiative, triggered a massive liquidity crisis in DeFi on April 18, 2026, as his 'withdraw now, ask questions later' post on X spurred over $6.6 billion in withdrawals from Aave V3. The frantic capital flight, which saw stablecoin borrowing rates surge to 15%, highlights the extreme market sensitivity to insider signals and underscores the persistent volatility at the heart of decentralized finance, even as the broader crypto asset class continues its institutional adoption.

Was Zeller sounding the alarm or fanning the flames?

In subsequent posts, Zeller declared the situation “under control” and announced the immediate end of ACI’s Frontier ETH staking program, offering to make all ETH from its validators available to Aave’s DAO to help protect WETH depositors. “It won’t help much,” he wrote, “but seems like the right thing to do now.”

Spark’s MonetSupply, for his part, was unsparing in drawing a competitive lesson. Spark had deprecated rsETH as collateral back in January and maintained high maximum borrow rates on its ETH market, a policy that was “not very popular among eth-loopers,” he conceded, but one that left SparkLend with ample liquidity while Aave markets across mainnet, Arbitrum, Plasma, Mantle, and Base locked up.

Aave’s total locked value (TVL) has fallen from over $26.3 billion as of April 18 to around $19.8 billion. Its token, AAVE, is currently down by over 18% over the past 24 hours, trading around $92.2 as of the time of writing.

What actually happened to Aave, and how serious is the damage?

The crisis started on KelpDAO, a liquid restaking protocol built on Ethereum. 

On April 18, an attacker exploited a vulnerability in KelpDAO’s LayerZero-based cross-chain bridge, which enabled them to manipulate the protocol’s messaging layer into releasing 116,500 rsETH tokens, roughly 18% of the total circulating supply, worth around $292 million.

According to EmberCN, “the amount of funds withdrawn from Aave has reached $6.6 billion, with half ($3.3 billion) being stablecoins,” while Justin Sun alone withdrew around 65,584 ETH, worth around $154 million.

EmberCN later posted that Sun withdrew 53,660 ETH ($125 million) from Aave in the early hours and deposited it into Spark.

Monetsupply.eth, head of strategy at Spark, a direct Aave competitor, warned that with ETH utilization pinned at full capacity, borrowers using ETH as collateral for stablecoin loans cannot unwind their positions even as stablecoin borrowing rates go up. 

Why did Zeller leave Aave?

Zeller founded ACI as Aave’s primary governance and business development delegate, making him one of the protocol’s most influential voices for years. But the relationship between the DAO founder and the leadership of Aave Labs soured badly in the final months of 2025.

There was a governance dispute over Aave Labs’ decision to redirect swap fees on its platform away from the DAO treasury and into a Labs-controlled wallet, a move critics saw as a privatization of the protocol.

Zeller alleged that Labs-linked wallet addresses had swung a major governance vote in the Labs’ favor and declared that there was “no role for an independent service provider in an environment where the largest budget recipient holds undisclosed voting power and uses it on its own proposals.” 

ACI began winding down around this period, declaring that it was leaving. However, it is not alone, as BGD Labs, the developer team behind Aave V3’s core codebase, and Chaos Labs, Aave’s risk curator, have also announced their exits.

The crypto card with no spending limits. Get 3% cashback and instant mobile payments. Claim your Ether.fi card.